The New Chicago School- Myth or Reality-

University of Chicago Law School Chicago Unbound Journal Articles Faculty Scholarship 1998 The New Chicago School: Myth or Reality? Lisa Bernstein Richard A Epstein Eric A Posner Randal C Picker Follow this and additional works at: https://chicagounbound.uchicago.edu/journal_articles Part of the Law Commons Recommended Citation Lisa Bernstein, Richard A Epstein, Eric Posner & Randal C Picker, "The New Chicago School: Myth or Reality?," University of Chicago Law School Roundtable (1998) This Article is brought to you for free and open access by the Faculty Scholarship at Chicago Unbound It has been accepted for inclusion in Journal Articles by an authorized administrator of Chicago Unbound For more information, please contact unbound@law.uchicago.edu The New Chicago School: Myth or Reality? On Friday, November 21, 1997, Roundtable hosted an event as part of its Interdisciplinary Program Series entitled, "The New Chicago School: Myth or Reality?" The panel discussion had as its origin an article by Jeffrey Rosen which appeared in The New Yorker's late October special double issue, called "The Next Issue." In his article, Rosen, talking, among other things, about new kinds of crime control and prevention strategies, quoted former University of Chicago Law School professor and current Harvard Law School professor Larry Lessig "'My aim,' Lessig announced, 'is to outline a research program for what I will playfully refer to as the New Chicago School.' This new program, he promised, would study the ways that law can influence behavior indirectly, by changing social norms." Roundtable invited Lisa E Bernstein, then a law professor at Georgetown University and now a professor at The Law School; Dan M Kahan, a professor at The Law School; Tracey L Meares, an assistant professor at The Law School; Randal C Picker, a professor at The Law School; and Eric Posner, then a law professor at the University of Pennsylvania and now a professor at The Law School, to participate in a panel discussion in which each talked about his or her work in social norms and then commented briefly on the socalled New Chicago School Richard A Epstein, James Parker Hall Distinguished Service Professor of Law at The Law School, was asked to moderate and to comment What follows is a transcript of the event EPSTEIN: Thank you As I look down the table, the first thing that is clear to me is that all the speakers are representative of the new law and economics, but the moderator of this panel should, in some sense, be regarded as the incarnation of the old law and economics Now the only point I wanted to make is that while there are many norms at play here today, given the number of people and the scarcity of resources, there is one property rights rule which I will vigorously enforce, and that is the rule that keeps each speaker within the allotted time It is not random that I am sitting next to the podium It's to allow swift kicks to the shins [laughter] when someone speaks over the 12-to-15 minute limit In terms of order, we combine necessity with choice We are going to start with Dan Kahan, not because he insists upon going first, but because he has Jeffrey Rosen, The Next Crimebuster: The Social Police, New Yorker 170 (Oct 20 & 27, 1997) Roundtable a seminar, in, of all things, social meaning, I dare say, which he has to attend at four o'clock He will ungraciously slink out, and in view of the fact that he will not be here to answer questions or to submit to barbs, he'll take a couple of more minutes At this point, I'm going to sit down, ready to glare at our speakers if they trespass beyond their time, while hoping that, within their allotted time, they both amuse and inform Dan? Let's get the show going KAHAN: I'm going to talk about two things First, I'm going to say what it is that I'm trying to with social meaning in my work on criminal law Then I'm going to address the question posed for the panel, namely, is the work that I'm doing, and that the other panelists are doing, part of a "New Chicago School?" So let us start with the question, what am I doing with social norms? The answer is trying to negotiate the space between sociology and economics The debate between these two disciplines has dominated criminal law theorizing for decades-and not just in lecture halls, but in legislative chambers and courtrooms as well It's a debate that's as hopeless as it is spectacular Economics is practical, but thin From the simple premise that individuals rationally maximize their utility, it generates a robust schedule of policy prescriptions-from the appropriate size of criminal penalties, to the optimal form of criminal punishments, to the most efficient mix of private and public investments in deterrence Very practical, yet it is the very economy of economics that ultimately subverts its goal: its account of human motivation seems too simple to be believable, and its prescriptions seem too severe to be just Sociology, in contrast, is rich but impractical It supplies breathtakingly complex and realistic accounts of why individuals break the law-from the criminogenic properties of poverty to the self-reinforcing culture of criminality But these concepts not really tell us what to to reduce crime, or rather, they tell us to something-attack the "root causes of criminality"-that our society has neither the expertise nor the political will to achieve What we need, then, is a third way of thinking about criminal law, one that combines the virtues of both economics and sociology without succumbing to the vices of either And the key to constructing this third option, I think, is social meaning Social meaning refers to the information that an action or a law expresses about a person or community's values It's part of the rich social context that the economic account of crime tends to overlook, but at the same time, it's a phenomenon that's sufficiently discrete and malleable to be regulated efficiently Adding this little piece of sociology to the economic conception of deterrence generates a host of policy prescriptions that are more efficient, more just, and more politically feasible than the ones suggested by either economics or sociology alone Let me give you a couple of practical examples The first relates to juvenile gun possession Authorities often try to discourage this conduct by altering incentives in exactly the way that rational choice economics suggests they 19981 The New Chicago School should: by rewarding students who voluntarily turn in their guns, and by severely punishing those who not This carrot-and-stick approach, however, is notoriously ineffective An account that focuses on social meaning can help to explain why Social meaning is an important part of what motivates students to carry guns to school: possessing a gun can confer status because it expresses confidence and a willingness to defy authority; by the same token, not possessing one can signal fear or timidity and thus invite aggression Carrot-and-stick policies not anything to defuse these connotations; on the contrary, they actually help to construct them: because they demonstrate just how much authorities resent guns, carrot-and-stick policies reinforce the message of defiance associated with possessing one, thereby increasing the expressive value of such behavior One policy that is believed to be effective is to pay rewards to students who turn in gun possessors Again, social meaning helps to explain why This tactic works not just because it facilitates seizure of weapons, but also because it interferes with norms that give guns their meaning When students fear that their peers will report them, they are less likely to display their guns; when students are reluctant to display them, guns are less valuable for conveying information about one's attitude and intentions They not have the same meaning anymore You are not showing the gun; is that because you are a coward or because you are being prudent? You have ambiguated it That reduces the value of carrying the gun in a way that the carrot-and-stick approach has actually aggravated it In addition, the perception that onlookers are willing to sell out possessors counteracts the inference that possessors enjoy high status among their peers The snitching policy thus reduces the incidence of gun possession both by deconstructing its positive meaning and by disrupting behavioral norms-including the ready display of guns-that are essential to that activity's expressive value That is an example of how social meaning influences individual decisions to break the law But social meaning also influences and constrains collective decisions about how to deal with lawbreakers Consider in this regard my second example: alternative sanctions The standard economic analysis defends using fines and community service for serious but nonviolent crimes on the ground that these punishments supply essentially the same amount of deterrence as imprisonment at a substantially smaller cost This proposal enjoys broad-based support among academics and reformers, but has fallen on deaf ears politically speaking Why? The problem is that this account ignores social meaning Members of the public expect punishment not just to protect them from crime, but also to express their moral condemnation of it Imprisonment unmistakably expresses moral indignation because of the sacred place of liberty in our culture The conventional alternatives, in contrast, send a much more ambiguous signal To the ears of the public, fines seem to say that offenders may buy the privilege of breaking the law We cannot very well condemn someone for purchasing what we are willing to sell Community service also sends a confusing message: Roundtable we not condemn persons who educate the retarded, install smoke detectors in nursing homes, restore dilapidated low-income housing, and the like We admire them What's more, saying that such services are fit punishments for criminals insults both those who perform such services voluntarily and those whom the services are supposed to benefit These recurring expressive objections are what make alternative sanctions politically unacceptable notwithstanding widespread support among commentators and reformers If we want to replace imprisonment, in other words, we need an alternative sanction that is not just cost-effective, but social meaning-effective How about shaming punishments, like bumper stickers for drunk drivers, publicity for toxic waste dumpers, signs or distinctive clothing for sex offenders, and the like? These afflictions unambiguously express moral disapprobation Accordingly, substituting shame for imprisonment is unlikely to offend the public expressive sensibilities that have blocked the conventional alternatives At the same time, shaming punishments are likely to work just as well and cost no more to impose than the conventional alternatives Indeed, shame seems to be taking off So social meaning helped us to identify an alternative that is more efficient and less severe that imprisonment but that is equally acceptable to the public Isn't that what the old school would call "Pareto-optimal" or something? Okay, that is what I am trying to in my work Now the question is whether there really is a "New Chicago School." The answer, in my view, is, who cares? In my view, the only question that I know it's important for each one of us to answer is, what valuable things can you with social norms, or social meanings, or social origination, or whatever your favorite brand of socialism happens to be, that would not otherwise get done? [Laughter.] It might be the case that there are synergies in our work that allow each of us to more than he or she could working alone But contemplating what those interconnections are abstracted from the practical things we are trying to do-to me that's just professional legal ideology contemplating its own navel As the old Chicago School would put it, "your opportunity costs could not possibly be low enough to make doing that the best use of your time." Or as the New Chicago School, I hope, would say, "Just get on with it!" BERNSTEIN: I don't write about the types of issues that Dan writes about, the sort of sexy things that might appear in The Wall Street Journal or The New York Times I write about commercial law, more specifically, something that I've labeled private commercial law What is private commercial law? By the term "private commercial law," I mean the comprehensive sets of substantive contract default rules that have been developed by trade associations to govern transactions between their members These rules are interpreted and enforced in association-run arbitration tribunals staffed by industry-expert merchant adjudicators Industries governed by private commercial law have, in effect, opted out of the public legal system-squarely rejecting both the Uniform Commercial Code and state-supplied rules of procedure 1998] The New Chicago School Private commercial law exists in over fifty different industries, including diamonds, independent films, rice, cotton, hay, and tea In some industries, transactors agree to be bound by these rules as a condition of membership in an important trade association or exchange In others, they can opt into these rules on a transaction-by-transaction basis by including a standardized arbitration clause in their contract in situations where it seems to suit their fancy The tribunals that interpret and enforce private commercial law are quite different from both courts and American Arbitration Association-style commercial arbitration systems They are not touchy-feely informal tribunals Rather; they operate under clear, definite, and specific procedural rules complete with pleading requirements, statutes of limitations rules governing offer of judgment, fee and cost shifting provisions, and detailed jurisdictional specifications Many of them produce written opinions that are similar in form to judicial opinions, while others make only simple awards stating the name of the prevailing party and the amount of damages, if any, awarded These private legal systems have the ability to bring to bear on the transactors and the disputants all sorts of pressures that are, for the most part, inaccessible to courts For example, if you are a transactor in the diamond industry, and you have a dispute with someone, and you go to arbitration, and a judgment is rendered against you, and you don't comply with that judgment, what happens to you? Well, first, you are tossed out of your local diamond association Second, your picture is faxed to every diamond trading center the world over; it's enlarged, and it's posted, along with a statement that you both failed to meet your commercial obligations and failed to comply with a judgment rendered against you In some sense, it's an example of one of Dan's good old shaming penalties, so I suppose, in that sense, my work is part of the so-called New Chicago School One might ask why I spend my time reading decisions of the arbitration tribunal of the National Grain and Feed Association and back issues of trade publications like the National Hay Association's newsletter which, just for your information, is called "Hay There." These sources are not exactly exciting reading So why I bother? The reason is this: private legal systems provide us with close to ideal commercial law laboratories They provide a context where it is possible to explore the connection between the formal transactional rules embodied in trade codes and written contracts, and the informal norms that govern work-a-day contracting relationships, free from the complications introduced by imperfections in the public legal systems such as high legal system costs, uninformed transactors, and concerns related to the institutional competence of adjudicators My hope is that by looking at the reasons why industries governed by private legal systems have opted out of the public system and by exploring the ways that private legal systems create a value for merchant transactions, it will be possible to develop a clearer understanding of the connection between formal rules and work-a-day behavior that can be used to devise ways to improve public commercial law and adjudicative procedure Moreover, attempting to create commercial law that is based on a sound empirical basis is an endeavor that is long overdue Although Karl Llewellyn, Roundtable the drafter of Article of the Uniform Commercial Code, acknowledged that the Code should have an empirical basis in merchant reality so as to be accommodating to merchant concerns, when writing the Code, Llewellyn basically sat around in his armchair, sure he visited a few Indians, but mostly he sat around in his armchair imagining what it was merchants would want Strangely, his wife was out collecting data on these merchant-run private legal systems, but for some reason, the two never seemed to have discussed their respective endeavors So in many ways I'm trying to bring Soia's empirical work to bear on Karl's theorizing and armchair empiricism EPSTEIN [interrupting]: A marriage? BERNSTEIN: Marriage is a subject I have no personal knowledge of I seem to be in the Llewellyn camp as far as that's concerned-a pure armchair empiricist [Laughter.] In any event, what has my research found? Well, one could say my research has found that Karl got it seriously wrong Karl wrote a commercial code filled with broad, vague, standard-like terms such as "reasonable." What types of rules the Grain and Feed dealers adopt? Bright-line, clear, inflexible rules Karl loved his notion of "good faith"; he even made it a mandatory rule The merchants I study act in good faith all the time and impose strong nonlegal sanctions on those who act in bad faith, but their rules include duty of good faith? Is one implied in their contracts? No Karl wrote a code that directs courts to look at imminent business norms reflected in the course of dealing, course of performance, and usages of trade in deciding cases He insisted that merchants would like this, that it would make public commercial law accommodating to merchant concerns Do merchants want this? Is this the adjudicative approach chosen by their tribunals? No Do their arbitration opinions mention unwritten customs and usages of trade? Rarely Do these merchant adjudicators know what the customs are? Assuming for the moment that there are customs, and that is something my work is increasingly challenging, merchants are certainly better able to determine their content than courts, yet these merchant arbitrators don't look at customs They look at the contract, they look at the rules, they decide the case They are highly formalistic, Willistonian-type adjudicators Well, where are norms in all of this, you might ask A good question The closest I can come, really, to answering it is to say that in addition to studying the formal aspects of these systems-what's written in their arbitration opinions and what's written in their rules-I also go out and socialize with these guys Go to their trade conventions, talk to them, take their training courses I'm a qualified Grain and Feed arbitrator [Laughter.] I am They give you a test just like your commercial law exam in law school, you have to pass it, and they grade it and give you comments and the rest, and they give you a nice certificate in the mail So I go out, and I meet these guys, talk to them in hotel bars, and all the rest [Laughter.] I try to find out how they actually business Sometimes I send out mail surveys; other times I conduct telephone or in-person interviews As it turns out, what merchants actually in their everyday dealings often differs significantly from what is written in their 19981 The New Chicago School contracts as supplemented by the industry's bright-line trade rules Merchants operate under a very different set of norms in their every day dealings The only times the bright-line trade rules become relevant is when their relationship has broken down, they hate each other, don't want to see one another's face, and are ready to terminate their relationship In other words, in end-game types of situations Essentially, my research focuses on trying to better understand the connections among work-a-day commercial norms, formal commercial rules, and various different approaches to commercial adjudication I look at these things in an effort to see what we can learn from the operation of private legal systems that can be helpful to us in trying to improve public commercial law and public adjudicative approaches and procedures As for whether or not this is part of some new school of thought, I basically agree with Dan If you ask me what unites the people who are sitting up here on this panel, I'd say that it's a willingness to draw from many sub-fields of law and many different subfields in social sciences in an effort to come up with more interesting things to say about problems that legal scholars have been writing about for, certainly as long as I can remember, and hopefully as long as Richard can remember as well [Laughter.] MEARES: We move from commercial law now, back to the criminal law There may be fewer differences than one would think I hope to illustrate the parallels between my work and Professor Bernstein's by demonstrating that a norm-based view of compliance depends upon what we might call private law enforcement-a law enforcement that shares features of private commercial law, which Professor Bernstein just discussed Whether the work I is part of a school that is new is a question I'll leave aside because I think you'll find, as I begin to talk, that the underpinnings of the work that I are really part of a school that's quite old Although the school I rely upon is called the Chicago School, it's not the old Chicago School of Economics; rather, it's the old Chicago School of Sociology I'll get to that in a moment What I would like you to remember, though, as I talk, is that everything that Dan said about economics is probably right, and everything that he said about sociology is probably hopelessly wrong [Laughter.] Let's start with what I think is clear It is quite clear that policy-makers in the criminal law area are myopically focused on an individual-level conception of crime and a corresponding individual-level solution to the crime problem Let me give you an example It is uncontroversial to argue that a person who is poor and who is unemployed is more likely to steal than one who is wealthy If we believe that, then we might also believe that the way to make sure that crime is reduced among people who are poor is to raise the price of crime for the person who is committing crime by having much more severe sanctions for prohibited conduct-in this case, theft We might also try to enhance the level of the certainty that this person is going to be caught and convicted Roundtable Now it should be obvious that the individual-level explanation of crime has some force It makes sense that people who are poor are more likely to steal than people who are wealthier The problem is that the individual-level explanation doesn't explain enough It doesn't help us to understand, for example, that most people who are poor not, in fact, commit crime A community-level explanation of crime, however, I think, has more explanatory power This is where this first diagram comes in [Exhibit Not included in transcript.] This is a diagram of the social organization model I work with that instead of looking to individual-level characteristics to predict crime, factors such as unemployment, ethnic heterogeneity in neighborhoods, whether or not people are moving a lot, mobility in neighborhoods, and the like, says that we should look to community-level characteristics of a neighborhood What are those community-level characteristics? Prevalence of friendship networks, the extent to which there is community-level supervision of youths and peer groups, as opposed to just parents minding what their own kids do, and, very important, as I'll get to at the end of this talk, the extent to which individuals participate in formal organizations like PTAs, block clubs, and churches Now the hypothesis is straightforward To the extent that you have more of this stuff in the middle-more friendship networks, more community supervision of teen peer groups, more participation in formal organizations-there will be less crime If you have less of the stuff in the middle box, there should be more crime This is the bottom line: if you believe that the causes of crime are situated in these community-level characteristics, as opposed to the individual-level ones, you'll be very skeptical about the efficacy of standard-based approaches deterrence to crime Why is that? The primary problem is that in certain communities where crime is very prevalent, we can predict that the standard deterrence-based approach that relies on raising the certainty and severity of punishment for offenders-typically, its severity-will distribute negative consequences in a way that disrupts the social organization of fragile communities Severe penalty strategies end up removing large numbers of spatially concentrated individuals-in the case of drug law enforcement, young black men-from their neighborhoods When this happens, we can expect an increase in family disruption, an increase in poverty, and an increase in joblessness All of these things, as you can see from the diagram, disrupt social organization processes Disruption of these processes leads to crime So the very solution to crime that deterrence-worshippers promote actually exacerbates the crime its promoters seek to address That's a problem A better approach to law enforcement embraces the potential of social organization The social organization model trades on the potential for government to help individuals who live in communities help themselves prevent crime But there's a key difference between the social organization approach and the standard approach And what is that key difference? The key difference is that the social organization approach will focus on law-abiders instead of law-breakers Where the standard approach seeks to try to convince people who are going to commit crimes not to, by making them more afraid, by 1998] The New Chicago School raising the punishment that someone will face if they in fact break the law, the social organization approach asks what we can to create better social structures in communities that can help the transmission and promulgation of law-abiding norms Importantly, this view of compliance doesn't look to whether or not people obey the law because they are afraid of the consequences Instead, what it does is rely on the reality that people in fact often obey the law simply because they think that government has the right to dictate to them what law should be This is a normative view of compliance as opposed to an instrumental view of compliance What this means is that if you actually increase social organization in the communities, you can create what I like to call "norm highways" in communities, and make it easier for people who care about crime reduction to achieve that by promulgating and transmitting lawabiding norms Then the question becomes, how can we improve normative compliance with the law through social organization improvement? Can government play a role? This is Dan's question What can we with this fancy theory? It's important to recognize that not only can government play a part, but law enforcement, police organizations and the like, can play a part But police organizations cannot enforce laws in the usual way Social organization theory demands that we think about law enforcement differently In some of the work I've done, I've pointed to three general ways of thinking about how law enforcement can be geared toward social organization improvement One way is by spatial, and racial, redistribution of law enforcement outcomes Let me give you an example Often, it is thought that an easy and cheap way to achieve reduction of drug-offending is to focus on the people who sell drugs on corners-low-level street dealers They're easy to find They're concentrated in particular areas Police know who they are So police engage in what is called a "buy-bust." Police pretend that they want to buy drugs, and then they arrest the people who attempt to sell them But what happens? When law enforcement focuses on this group, then the negative effects of law enforcement will be concentrated in the very communities that can least withstand it Social organization will, predictably, be disrupted Thus, buy-busts present a useful example of a policy that confounds its own crimefighting ends Is there a better way? I advocate reverse stings in the New Yorker piece In the reverse sting, police pretend to be drug-sellers Buyers come, then attempt to buy drugs from police officers, and they are snared What happens? The negative consequences of law enforcement are redistributed out of disadvantaged neighborhoods, often into the suburbs, a large number of whose residents buy drugs The statistics I've seen show something like 80 percent of people arrested in Chicago's reverse stings come from outside the area in which the drugs are sold-often suburbs Reverse stings ensure that residents remain in the community Not only that, reverse stings redistribute the consequences of law enforcement racially because it turns out that people who buy drugs are much more demographically varied than those who sell them It turns out that people who buy drugs 20 Roundtable revised In effect, you thought as a lawyer, a judge, and a legislator might about the various uses of the law in a multitude of social settings There is one clear benefit to this approach We not lose sight of the role of coercion in a legal centric system And even in a world that is filled with implicit norms and social sanctions, the dominant question has to be, to what extent and in what circumstances we think that the use of public coercion is justified against ordinary individuals? Coercion raises the stakes, and is always a two-edged sword It is strictly necessary to control misconduct by some, and when it does so, it operates as a social good But when it is misdirected, it can be the source of great social mischief In dealing with the current concerns with social norms, we must, paradoxically, develop a normative view of when coercion is required I think the presentations that we heard today are, in fact, very comforting on this point because I found that all our speakers exhibited an implicit libertarian bias, which I am happy to report to you The reason for this conclusion is as follows I think that the gist of what Lisa Bernstein said, and what to some extent both Eric Posner and Randy Picker endorsed, was that a legal system could be both part of the problem and part of the solution In some cases, it will intrude where it is not needed, and make informal adjustments more difficult than otherwise might be the case To counter that risk, it may well be best to limit the occasions on which the state is prepared to back its commands with force, but to make sure that when it does exert force it goes for the knockout punch But that said, within very broad ranges it is willing to tolerate all sorts of behaviors of which public officials might not approve Even so, these behaviors will not attract coercive sanctions, positive or negative That seems to be a fairly accurate description of the hands-off approach that government takes to the informal resolution of private disputes, and it could be easily carried over to other areas On this view, one can then mount a case for a limited government that is also a powerful government But to that, we have to figure out exactly where that government interferes with private conduct Generally, that answer boils down to two separate cases, the first of which is breach of contract, where people who wish to resort to the legal forum have committed themselves to it in advance The second area has to with the criminal side, the subject of remarks from Dan and Tracey I think it is quite possible to find a system in which the use of aggression is only controlled by private contract So what kinds of sanctions should be invoked to deal with aggressive behavior? One point that seems clear is that the optimal level of deterrence will not be obtained by using only ex post strategies that focus on individuals once they have already committed wrongs Those rules pay little, if any, attention to the social conditions in which the wrongful conduct takes place A fuller theory requires us to look at the local determinants of criminal behavior in the first place And that, in turn, gets us to worry about the influence of intermediate institutions, which was the subject of Tracey's comments, and about the expressive functions of punishment, and the need to contain low-level signs of 19981 The New Chicago School 21 social pathology, which is what Dan talked about Finally, it is abundantly clear that social sentiments on wrongdoers have some influence over the crime rates Let ordinary criminals be regarded as local heroes who act in defiance of state power, and that unfortunate sense of social solidarity will work to increase the overall crime rate Yet into this concern with social sanctions and moral persuasion, I want to stress a point that is too easily forgotten: in the midst of our revived interest in social sanctions and intermediate support networks, we ought never to forget that these systems are not, and cannot be, sufficient unto themselves to respond to the threat of criminal behavior Rather, their role is one of important supplements to the traditional modes of criminal enforcement The police not only attend local meetings; they not only act as public symbols; they not have solely an expressive function They also strong-arm individuals and throw them into jail Given that power, we had better make sure that they are directing their force against individuals who should be targeted and not at those who should be protected Once we recognize that traditional enforcement is not displaced by social sanctions, then we should be alert to dual sanctions as the reason for the recent decline in levels of criminal behavior In figuring out the influences for our recent good fortune, it is necessary to think about low levels of public surveillance and increased police presence on the streets But it is also notable that the percentage of crimes that have been solved and cleared have moved up; that the period of incarceration for serious crimes has again started to increase; and that the conditions for parole have also been toughened These factors taken together indicate that a fair bit of the old Chicago School-more deterrence leads to less crime-has to be included in the explanation for the recent drop in crime levels And I think that there is less novelty in these joint explanations than is sometimes allowed Perhaps, therefore, the "new law and economics" should not be oversold any more that we should oversell the New Deal With that said, I want to return to the ecumenical spirit that has characterized the remarks from the panel by noting that any successful understanding of, or response to, complex social phenomena or legal problems requires multiple levels of analysis, in which old-fashioned deterrence is mixed with newfangled social theory The theory of diversification that influences our investment decisions counsels us against putting all our financial eggs into one basket In organizing our social response to criminal conduct, we should follow the same general strategy We have to worry about the use and limits of legal coercion, which operates both as a complement to and as a substitute for various forms of social restraint Working through this issue does not require a high-minded ideological commitment of the sort that I can generate on other occasions But instead, it requires us to focus on the more mundane task of figuring out where social resources should be deployed so as to achieve the greatest net result from combining separate approaches Any social or legal intervention is likely to generate both local and global effects, so that the task 22 Roundtable of sound implementation will test our resolve and ingenuity in the years to come In closing, what I think is so nice about our panel is not so much that they all fall under a single rubric that they all have disclaimed, but rather that their diversity of approaches promises to yield overlapping insights on the proper organization of social and legal institutions There are powerful interdependencies among individuals in society so that in one sense we all thrive or fall together The choice of the correct social and legal norms can give us the tools to help improve our collective fate So with that said, and having kept, as everyone else did, in time, what we are going to is take questions You should address them to the panelists I will be a very benevolent traffic cop to the extent that I think that there is something to traffic about So questions, please? AUDIENCE MEMBER 1: As I heard you say, many of these methods need to work together As I understood many of the panelists say, the old school is sometimes and necessarily incompatible with the new social norms How you determine how much of each you need to bring to bear on any given situation? POSNER: I'm not sure I have an answer to the question It seems to me that we have different methodologies There is some overlap and some difference, but methodology in a discipline means that you commit yourself to certain assumptions, follow through on them, see what rigorous adherence to those assumptions might produce, and apply them to different areas of life I read sociology for the empirical data it supplies, and I read history, and I think about how I can explain these things using my framework I'm open to other theories from other disciplines, but I have never found them as persuasive or powerful as I have found game theory, but Tracey would probably say the opposite, as would others MEARES: Eric's right, I probably would say the opposite It might be because of the types of problems that I work with His model, repeat games, I think, is not as useful to answering the questions that I'm trying to answer which address the ways in which poverty and crime are located in specific areas The social organization model that was developed in sociology through the old Chicago School by two researchers named Clifford R Shaw and John McKay in 1942 is particularly suited to that model It is very useful to look at communities rather than what individuals do-which I think is the game theory model really Although I think both Eric and Randy would say maybe we are doing something at the community level, especially Randy's work Randy wants to aggregate individual choices, and that is where it gets especially sticky If you start doing a lot of reading in sociology, the community-level conception of social organization actually tries to distinguish that kind of 26 Clifford R Shaw and Henry D McKay, Juvenile Delinquency and Urban Areas (Chicago 1969) 1998] The New Chicago School 23 aggregation from something that comes from the community That gets really tough So when you say, how much of the old model I use? The answer is, very little It is just not relevant to what I do, other than to say that this conception that I am working with really has much more explanatory power EPSTEIN: I would put the argument in the following way Formally, what you have is a set of inputs, and you try to predict the outputs Descriptively, the simplest form of the model says that we have a series of legal constraints on the one hand and social ones on the other What we are trying to is estimate the coefficients both to the legal sanctions and to the social sanctions, to predict the overall output The model should never take the form that sets one or the other of these coefficients at zero Rather, it generally turns out that as you move from area to area, the coefficients of the two items may well shift first one way, then the other It seems to me that the model remains perfectly constant across these areas and that the only question to ask yourself is whether you are amenable to one form of understanding or the other So, for example, if you were trying to figure out how exchange mechanisms work with respect to Professor Bernstein's standard fungible goods, you would predict a very rapid velocity of transactions with this homogenous product, which, in effect, allows you to have substituted commodities and so forth Whereas the moment you start dealing with service industries, you would predict that the level of velocity of exchanges would be much slower because the substitution of one worker for another could alter the benefits provided The legal rules reflect that difference with respect to both assignment and delegation Free assignment for standard commodities, and no free institution of labor One would surely expect that the social practices on some substitution BERNSTEIN [interjecting]: Except if the transaction turns out to be terribly important or complex despite the fact that you are dealing with a relatively standardized commodity Even with standardized commodities,assignment is not looked upon in a terribly favorable light [Professor Epstein begins to speak, and Professor Bernstein responds.] After you, Richard EPSTEIN: No, no, I think this is important The grading system does not make cotton into a fungible commodity Lisa told me the reason is that grading is sufficiently difficult, so that what you are purchasing is not only the cotton, but also the assessment that someone makes out of it, so that these are, in fact, service transactions that are embedded in commodities transactions Once you understand these interactions, then it proves that the model is robust Commodities are not pure types, service transactions are not pure types, and then you try to work your way through the cotton blenders [interrupted by laughter] I think a lot of what the panel members are saying is that you can be both rigorous and ecumenical AUDIENCE MEMBER 2: I am interested in the blending of church and state and police force, and I am curious as to whether, in your research, you have come to any conclusion about whether there should be more blending in the public education 24 Roundtable MEARES: In education? You should have asked me about my research! I can kind of speculate about the extent to which that would be beneficial to the organization The theory says yes As far as the actual empirical research, one of the interesting features of it is that the schools play very little role and some of them played absolutely no role in implementing this at all I am not really sure why One speculation is that the norms of church/state separation are much stronger and established with respect to schools and churches, and schools know this is something that they are not supposed to No one even thought about it with respect to the police, so when it was tried, I think City Hall and other institutions were shocked, and when it turned out to be beneficial and successful, they were cowed into not saying anything But to get back to your first question, I think the implications and the theory behind it suggest that it would probably be a good idea This, of course, means that someone will have to seriously think about the constitutional law questions I have done a little of that, but that is certainly not my area I have talked to Michael McConnell, who used to be here, about it, but those of you who know anything about First Amendment jurisprudence know that it is pretty much a mess and there is room to think about these issues EPSTEIN: Yes! I have a comment I think that Tracey's instincts are right, and I will tie it into the general matters of decentralization The Chicago school system, for example, until recently, was a highly centralized model Everything came from the top, and it was very difficult to get at the reactions between the community of parent groups and church groups and crime groups The parochial school system in the city of Chicago essentially works on a system of budget decentralization-"Monsignor, priest, operator, here is your budget for the year You run this place, and at the end of the year, we will haul you onto the carpet and hold you accountable." That decentralization allows for a much greater interaction to take place between the school on one hand and other groups in local communities And the success of the school system, I think, is going to come from the degree to which the public schools can engage in that degree of decentralization, or that voucher-type institutions and charter schools can push the process a little further And those of you who saw the Mayor [Richard Daley] when he came here on Tuesday [November 18, 1997] would recognize that he is a raging bull when it comes to education inside the city He regards it as his number one priority If you not work education, crime, illegitimacy, and jobs, then you not stay together as a neighborhood And it is nice to have a leader who feels strongly about this issue Yes, questions? AUDIENCE MEMBER 3: This is a question for Professor Picker Have you done any work analogizing your model to the old school of law and economics? And by that I mean, say that you have a market for norms, transaction costs dominate the gains in superior norms, and that is what the services include? PICKER: The answer is no, I guess In these models there are no transaction costs-there are no costs of switching and no costs of identifying AUDIENCE MEMBER 3: Can you include information? 1998] The New Chicago School 25 PICKER: Absolutely, and subsequent work is doing exactly that At this point, I not have anything to conclude It is clear that introducing an even richer framework makes these issues more complicated We can this in six months, and maybe I will have an answer, but I not have an answer now AUDIENCE MEMBER 4: It seems to me the norms that we have been discussing are more private norms Surely there are norms out there that would involve what might be called public norms, that is, involving the government in some way to resolve a dispute instead of private mechanisms that have been developed between people To the extent that those norms exist, has any of your research taken into account the public choice problems that might come to bear on these types of norms? POSNER: I am critical of some work by others on similar grounds They seem to think that when a bad social meaning exists-for example, people thinking that cigarette smoking makes them look cool-the appropriate response is simple If the government could just tell people this is not true, that would change the social meaning of cigarette smoking; if the government could convince people to think that cigarette smoking was bad, then people would stop smoking Their argument is that governmental discouragement is better than if the government did something more costly like throwing smokers in jail or subjecting them to other sanctions There are two problems with this theory If the government intervenes too much in behavior people already value a great deal, they will be suspicious of the government rather than willing to change their views about some kind of behavior Consider cigarette smoking The government has indeed engaged in education campaigns to persuade people not to smoke, and while it is true that adults smoke less than they used to, teenagers are smoking more You can tell a story about how teenagers like to rebel, and whenever the government says something is bad, they interpret that as good In fact, there's a study which suggests that teenagers who read the warning labels on cigarette packages are more likely to smoke than teenagers who not, which prompted the editor of the journal to write that maybe the government warning label should say, "Smoking is Cool." The other problem is the public choice problem which is more directly your question People are going to lobby the government to change social meanings To give an example: flag burning There are lots of disputes which are trivial in the sense of what is at stake When you burn a flag, no one is injured in any material way, and yet recently, this was a huge issue, and the question is why? You can again tell stories about people lobbying against flag burning not because they care so much about whether somebody burns a flag or not, but because they want to show other people in their group that they are loyal to whatever the group's values are But if the government actually did suppress flag desecration, the meaning of the flag might change To honor the flag when the government is holding a gun to your head is not really to honor it The flag becomes an empty symbol Such paradoxes arrive where people lobby for laws which are self-defeating and interfere with the values 26 Roundtable that they care about So the analysis is quite difficult, and I am quite pessimistic about the government's ability to manipulate people's beliefs EPSTEIN: In terms of the cigarette model, the period of greatest decline in cigarette smoking was the period that had dubious health claims Because when somebody puts smoking in an advertisement that somebody else cares to watch, the message that my cigarette does not hurt you contains the implicit message that everybody else's will kill you The smokers of the other brands read that message, and most of them don't switch to the preferred brand, but drop out altogether So in the 1954-to-1956 period, declines were rapid, and this suggests, in effect, that in some cases the centralized norm management will have very deleterious effects And the other point is, when a government creates a norm at the center of that table, it does not act solely by persuasion Governments will always rely on coercion The rise of Jim Crow and the rise of Nazism both had very extensive propaganda machines that were associated with them I not like that coupling arrangement I think state norms are much more dangerous than missionary norms, regardless of whether we like the missionaries They can't much harm to you; the state can PICKER: Two things Eric's example on smoking just shows us that if you a bad job of manipulating how people see things, you get bad results I agree, but the government must be sensitive to how people will perceive what the government is doing This is just to say that social context matters and having the government say it is different than having the coolest kid in school say it That's a big shock [Laughter.] On the second point about coercion, I think that there is a risk of coercion, that the public choice issue is a genuine one, and that nothing I say addresses this issue I have to figure out a story about how the government should these things, but I not have one right now Nothing in the model itself envisions coercion-it is more a question about creating opportunities, creating coordination In these models, once you create coordination, that is enough to drive things And creating coordination does not necessarily involve any sort of mandatory force at all POSNER: But it could PICKER: It could, sure, the government could always be bad EPSTEIN: But it cannot always be good [Laughter.] Never mind AUDIENCE MEMBER 5: To the extent your work has sociological ramifications and implications, are any of you working with sociology professors and people in that field? MEARES: The answer is yes I cannot continue my work without consulting people who have spent many years being trained in the sociology field I mean, I have spent lots of time reading, and I have some pretty good conversations with sociologists like Robert J Sampson, who is here at the University of Chicago and is considered the leading, or one of the leading, criminologists in the country But you not learn in law school how to the empirical research that I have to to make this project worthwhile and valid The way to that easily is to collaborate with other partners Fortunately, at the University of Chicago, we have top-rate departments in sociology, economics, political science, and the like, and it is really easy to 1998] The New Chicago School 27 POSNER: I don't PICKER: It's just me and my computer at this point BERNSTEIN: I talk with them, but don't always follow what they suggest AUDIENCE MEMBER 6: Is there a common philosophy behind this? I know we talked about interdisciplinary economics and sociology Is there, or should there be? Because I am wondering if at one point something would unite the people on the panel besides just the buzzword of "social norms?" Is there some underpinning philosophy, or is that something you see would be a good addition to the New Chicago School, if there is anything like that, or should it shy away from some kind of philosophic notion about the way laws and individuals work together? EPSTEIN: What you might is to rank the people on the panel on a scale of the size of government from smallest to largest, and what will happen is that the array of views on social norms will find a continuum which is not dissimilar to that of people who more traditional doctrinal analysis The interesting question is whether there are shared perceptions-first, whether you think it should be big or small, and second, how people line up And I would say, in this group, there are certainly no members of the continuum on the hard left There are some people here who are certainly more to the right [Picker points in Epstein's direction.] It goes from liberal to conservative or liberal to libertarian rather than far-left to far-right POSNER: I not think my work has any particular ideological bent EPSTEIN: I have heard your speech on public choice That was an ideological speech POSNER: I think that my work has interesting implications for how governments can change signals that produce harm EPSTEIN: It also has implications for them to describe the size of government POSNER: Well, it is not clear The models that I use suggest that spontaneous order can be quite bad You can get destructive fads and pointless fashions which are illustrated nicely in Randy's computer work You can get inefficient equilibria, and it's never clear whether government intervention is going to make people better off or worse off in any given context It's too difficult, too fact-specific an inquiry PICKER: You need a much richer model about how the government operates-to go back to the public choice question-before you can make that comparison, don't you think? POSNER: I think you can be critical of facile proposals to use government to change people's views and behavior, but it's much more difficult to be positive, to make proposals Questions about desirable government behavior can only be answered through trial and error and difficult practical judgments Very little of what I would shed light on this; I resist any ideological label AUDIENCE MEMBER 7: What are the possibilities for doing controlled experiments, talking about trial and error? Can social norms in the real world be tested or used for preventing some sort of negative outcomes? 28 Roundtable PICKER: I think it's very hard One of the things I like about this-I don't spend too much time confusing my models with the real world-is that one of the things we lack in social science is a framework in which we can run tests And to the extent that the richer I make my computer models, the closer I come to something that tracks reality in a richer way than traditional economics does-the way people talk about building artificial societies and some testing-to actually take that into the real world and systematic tests, that's more a question for Tracey or Lisa MEARES: One of the things I'm trying to with the church study is to use lots of different methods of gathering information You can qualitative interviews and surveys and focus groups, and you can gather information in all sorts of different ways and try to sit there and sift through it and try to isolate all the different phenomena that way What we are trying to with the church study is to try to show that there is a net social organization benefit with the social integration between the church and the police It's not immediately obvious that there would be a net social organization benefit, because even as people become more embedded in institutions that suddenly have something to with each other that historically have not, people embedded in a church, let's say, may withdraw, because they may not like the fact that the church now has something to with the police And police officers may think, "This is not really part of my job, this is not law enforcement." They may think that the job of police is to be primarily concerned with violations or some fraud thing that Richard likes to talk about-government is primarily concerned with EPSTEIN: What I said was MEARES: The problem is that law enforcement might be much more effective in communities when that distinction between law-abiders and lawbreakers can be ambiguated in certain ways, so that those lines aren't as distinct I understand what he is saying, that we want to continue to have police officers who continue to enforce the criminal law the way we often think about it I want to also say that police officers can play a role in encouraging private law enforcement, and in the areas where I have been working, they have to play a role, because that is the only way you can have this kind of institutional coordination that makes private law enforcement possible EPSTEIN: My point was not that police only enforce the law, but also that they represent the law When the police engage in one set of activities, it's going to influence the way they behave and are perceived by others I think they'll be much more successful if they establish community relations-bike police, foot police, the whole bit, even church police-I'm all for it PICKER: It seems to me that cross-industry comparisons would be illuminating for this BERNSTEIN: Yes, although it is imperfect, I can go through my data and note that my industries have different damage measures and look at how that affects the types of disputes that come to arbitration and other elements of the system Or I can look at industries that have an equivalent of the Code's 1998] The New Chicago School 29 impossibility provision and those that don't and go and look at how transactors actually react when a force majeure occurs, in an effort to gain a better understanding of how a rule affects what goes on out there in the world Of course, you are not going to get the most pristine types of comparisons because there are always other aspects of the industries that need to be taken into account The important thing is that you can get further than you could by ignoring the issue entirely, which is what scholars have done for generations AUDIENCE MEMBER 8: I wondered about one of the big problems of interdisciplinary scholarship generally and at UChicago in particular: often among lawyers who go out of their field, they kind of it in a half-hearted way, and they are radically unfamiliar with the methods and the sorts of things that are being done in that field I'm thinking in particular about history where lawyers often abuse history and come up with sweeping historical conclusions without really doing any of the historical work I think this is really blatant in The Tempting of America27 -as sympathetic as I may be to its conclusion I wonder what you have to say about that generally BERNSTEIN: Well, I guess in my view I not necessarily see sociology as being outside of the law, nor I see economics as being outside of the law So I not see myself as going so much into other areas Lawyers have to be concerned with the ways that contracts are drafted and the ways clients behave when they actually perform contracts These are things that are pretty squarely within the realm of what lawyers should know about They may be things that are outside the realm of what legal academics usually think about when sitting in the library, but I not think they're outside the realm of what lawyers think about in their practice There are a few areas in which I feel I am on unsure ground-sometimes my analysis relies on properly understanding religious or regional social norms When I studied the diamond industry, the fact that many transactors are Orthodox Jews meant that I had to go look at the religious court system and what it meant to have a judgement against you in terms of what happened to you in synagogue on Saturday, in terms of who would sit with you and who would invite you to Sabbath dinner And it was helpful that I had some personal experience in that community But when I'm going and talking to Southern cotton dealers who mention the remains of the "culture of honor" in the old South, I'm a little further removed from my personal experience and wish that I knew a little bit more about participant-observer sociological research Still, I think you're overstating a little bit the extent to which at least I am crossing disciplinary bounds PICKER: To say that it's hard to it right is right It is It's hard to that and actually master a substantive area of the law We just have high expectations at the University of Chicago Law School-you know that as well, 27 Robert H Bork, The Tempting of America: The Political Seduction of the Law (Free 1990) 30 Roundtable I guess I have a great feature in that this is completely new and in a bunch of different areas there a people trying to this It's not as if there's this 40year tradition of computer-based agent research that I'm working within I'm not We're all stumbling around in the dark trying to figure out what piece of the elephant we're touching Ten years from now we'll have a better feel for it Me, I mean, I have no discipline and no standards! POSNER: There's always a danger of superficiality in interdisciplinary work It is a danger on both sides Economists sometimes produce bad arguments about the law, because they not understand the legal issues that are involved Lawyers sometimes use bad economics MEARES: Often if you look at the sociological literature I have been working with, it is not that there are sociologists who are trying to law, there are sociologists who fail to recognize the relevance of law, in particular the relevance of government power in the models they're looking at For example, the Shaw-McKay piece I've been talking about-the way that communities are constructed.28 The way that they imagine this is that these spaces in the cities were created entirely by the market, that is, that the places that were likely to have the forced organizational structures, the police-prevalent friendship networks and community-level supervision of teen peer groups and the like, were functions of the fact that the least desirable places in the cities are next to industrial parks, and the people who are willing to move to those areas are recent immigrants and poorer people, and over time and depending on their circumstances, they would move, but this was entirely the result of the market There was nothing the government could to manipulate the structure of the community And of course, a lawyer would look at that and say that was absolutely wrong and this is exactly what we So there are lots of things that we can to actually add to sociology qua sociology and help better explain it EPSTEIN: I think that infrastructure is extraordinarily important, even in and for markets There is a tendency for people to forget that And as for the disciplinary side, there are only three cures to the ill One is that you could become jointly expert; we get lots of joint J.D.-Ph.D types, which was certainly uncommon when I first came out of law school Second, you can collaborate; and third is to have lunch and attend conferences with people and hope to pick up knowledge in other fields The answer is that there is no dominant strategy A lot depends on the work you are doing, on your intellectual bents and biases, and on your curiosities and energies AUDIENCE MEMBER 9: Did any of you tell Jeffrey Rosen that there was no New Chicago School, or did he miss it? EPSTEIN: He did not ask Not only that, you've got to understand he did not quite understand the old Harvard school His description of Langdell was, to put it mildly, wrong One of the reasons you misconstrue novelty is you don't understand the past If you haven't read the classical authors, you can 28 Shaw and McKay, Juvenile Delinquency and Urban Areas (cited in note 26) 19981 The New Chicago School 31 describe them in two sentences and get them wrong It's not necessarily perverse, but it is inaccurate PICKER: The story here is no school, no story He's a journalist building up a story, and if the existence of a Chicago school is a useful fiction for doing that, I'm all in favor of it EPSTEIN: And on that note, we'll take one more question AUDIENCE MEMBER 10: I'm still puzzled by the question of norm seeding I guess my problem is, I'm trying to determine to what degree what is being said here is purely descriptive or if it has some prescriptive element to it If we take into account what Ellickson said, what Picker said, what Bernstein said, we're getting a private seeding of norms going on, in which case I not see that there is anything that can really be done Either private parties will seed, or they won't I not see what anyone on the outside can If we say that a government can seed positive social norms, my question is, if there is internal support in the government to seed these norms, wouldn't we imagine that if these norms already exist and there are pockets of them and if they already exist and they haven't spread in the way that Professor Picker would have predicted they would spread, maybe we can come to the conclusion that those aren't positive social norms and aren't worth having the government seed them? PICKER: What matters most directly in my model is the difficulty in achieving coordination That's the narrow issue It's certainly quite plausible that the norm hasn't taken off because it's just no damn good The other possibility is that coordination hasn't happened The joy of norm-seeding is that it's going to be difficult for the government to coordinate people and say, "Guys, you have this, now take this norm and run with it." If it's not a good norm, it will die, and they'll revert back to the old That is why I think my losses are pretty bounded, and the upside is there, I think POSNER: That's not true, though You can imagine the government seeding a norm which is highly beneficial to the majority and highly harmful to the minority of people PICKER: Yes, my model is one in which we have lots of homogeneity, and what this looks like when we get a real situation has to be looked at very carefully EPSTEIN: But one other point: Ellickson's title is a bit overstated It's called Order Without Law." In the preface, he noted that he first tried to this study with respect to walls between neighbors where there are lots of different variations that he thought were grist for his empirical mill What he found out was that he could not the study There had been a federal regulatory system or a state system which had been imposed which had essentially said that everyone had to build party walls in the same Way And the difference is this: Ellickson is talking about norms which had no public enforcement-that is the open fields and closed fields This party wall stuff 29 Ellickson, Order Without Law (cited in note 2) 32 Roundtable [5:1 had a state inspector coming around, and you get legal centrism wiping out decentralization Whether it's good or whether it's bad is a different question, but the idea that all these customs on private walls are going to be robust against legal enforcement depends on whether you're talking about common law enforcement by private parties or about centralized administrative enforcement When you go to the latter, the stakes get higher, and if you're wrong, you're very wrong, and even if you're right, God bless you And with that, I'd like to thank our panelists [Applause] SPECIAL COLLECTION Psychology and the Law ... neighborhoods, gangs In such a world, it is very difficult for adults to transmit law-abiding norms They don't have the networks; they don't have the norm highways that enable them to transmit norms... arbitrators don't look at customs They look at the contract, they look at the rules, they decide the case They are highly formalistic, Willistonian-type adjudicators Well, where are norms in... meaning in my work on criminal law Then I'm going to address the question posed for the panel, namely, is the work that I'm doing, and that the other panelists are doing, part of a "New Chicago School?"